Flat not selling what to do

Philomena78

Hi everyone, 

3 years ago when the interest was low we bought an apartment in a lovely area as a place to stay in while commuting to work. We paid 180k for one bedroom in 2021 in a lovely town. With stamp duty and repairs it costed us 200k. Our circumstances have since changed and the economy also went down the tube.
We are trying to sell this as it is no longer needed and we cannot afford it. It has been empty for 18 months and on the market since February. We had an offer that fell through in August. Since then we dropped the price by 10k but no interest. 

Currently we are paying £1150 for the flat per month and with the council tax, service charge and bills  all round up to £1600.  The flat runs on electric boiler economy 7 but none of the viewers complained about this. It is well presented but with stairs it is not desirable for everyone.  The market situation is similar for other flats in the same area and many are struggling to sell with prices dropping to a low not seen before.

 Our flat was sold for 155k in 2016. I am looking for advice, should we drop the price dramatically to the 2016 level to get out of the mortgage and forget about recovering any of the money that we poured into the place? 

We are financially struggling to afford the 2 mortgages and this is causing a lot of stress.  We considered renting the place but the potential income will be £750 which obviously does not cover the mortgage. We are also concerned that potential renter will leave in the first 6 months due to the high energy cost. We even considered changing the heating system and then renting it but any more spending on this place is like throwing money in the fire.  There is no guarantee that we will see a recovery in the housing market at all. I have been reading the headlines about housing market recovery but that is not really a reality in our area.  We are not sure what to do. 

Tucosalamanca

If rent will not cover mortgage costs, you will struggle to sell.

Firstly, investors won't be interested as the return isn't nearly high enough to make it worth while.
Secondly, if people can rent for less than buying, there's little incentive for them to purchase.

Cost £175,000. 
If rental generates £9,000 per year / £750per month, it's just over 5% gross yield, that's not enough to entice an investor.

Could you move to an interest only mortgage and let the property out?
£750pm would cover the interest and leave a small amount over to cover your running costs (not ideal but would make it more bearable for the moment).
You would also be putting the bills onto the tenant, rather than paying it all yourself each month.

I fear that you're in a difficult situation, particularly if the market is flat with little sign of recovery.

What are comparable properties actually selling for?

Mark_d

You bought the small flat for weekday accommodation whilst you were maintaining your main home elsewhere.  That sounds like quite a luxury!

Personally I've never been in favour of one-bed flats.  Most people need a second bedroom for a study or in case they have a child.

Why is the flat costing you as much as £1600 per month?  Council tax should be low for a vacant property and energy ills should be very low too.

I think you should drop the asking price to £155k  with a view to selling as quickly as possible.  Every month that goes by is costing uou hundreds and squeezing your finances

user1977

Mark_d said:

Council tax should be low for a vacant property 

These days there's often a premium charged for longterm unoccupied properties.

RHemmings

For me, it would make a difference as to how much other money I had. If the money you will lose on this flat will not ruin your lives, then I think I would drop the price and run. But, if that's your life savings (very unlikely if you bought a flat as an additional luxury), then I would try and hold onto it more. 

Albermarle

  Our flat was sold for 155k in 2016. Currently it is advertised for 175k

According to the Nationwide regional house price index, Yorkshire and the Humber ( a big area I know) has only increased by 2% since 2016. This would indicate that £175K is overpriced.

 We paid 180k for one bedroom in 2021 in a lovely town in West Yorkshire. 

However the same index shows that since 2021, prices in that region have increased by 13%, including around 6% this year. So in theory it should sell for around £200K .

You could conclude from this info and the fact it is not selling at £175K, is that you overpaid for the flat in 2021.

On a more positive note, prices have been increasing in the region this year, and mortgage rates are creeping down, so hopefully come the next buying season ( March 2025) you will have more success selling it without dropping the price too much. 

EssexHebridean

How does yours compare with other flats in the same area or better still the same development/street in terms of decor and price?

The heating system will be a problem I suspect - as anyone who knows what they are looking at will either want a significant price drop or will run a mile, but you said no viewers had mentioned that - what feedback have you had from viewings so far? 

Brie

If having a mortgage is stressful then what extra stress would you have as landlords?  Frankly I don't think that's a solution unless you know people at work that would love to rent your place and thus you can guarantee the income and that it wouldn't be trashed.  (2 reasons I wouldn't have rental property is the unknown factors of ongoing rent being paid and if you aren't being paid and have tenants what will they do to the place while you try to get them out)

Albermarle

EssexHebridean said:

How does yours compare with other flats in the same area or better still the same development/street in terms of decor and price?

The heating system will be a problem I suspect - as anyone who knows what they are looking at will either want a significant price drop or will run a mile, but you said no viewers had mentioned that - what feedback have you had from viewings so far? 

From the OP.
  The market situation is similar for other one bedroom flats in the same area and many are struggling to sell with prices dropping to a low not seen before.

 The flat runs on electric boiler which is like burning money but none of the viewers complained about this. It is well presented but small rooftop property type.

subjecttocontract

Sorry to bring doom & gloom but I believe in being realistic. Let's look at the situation......
* You are finding the sales market in your area is already slow.
* We're a month away from a big impact budget which will put many people off until they know the damage.
* The economy generally is in dire straights.
* After all that it start getting very, very quiet leading up to Christmas & New Year and doesn't normally pick up until at least end of January.

Unless you have something special, stand out or unique to offer or your price is at the lower end of what's available, I see your chances of securing a buyer before next year as unlikely.

Philomena78

Brie said:

If having a mortgage is stressful then what extra stress would you have as landlords?  Frankly I don't think that's a solution unless you know people at work that would love to rent your place and thus you can guarantee the income and that it wouldn't be trashed.  (2 reasons I wouldn't have rental property is the unknown factors of ongoing rent being paid and if you aren't being paid and have tenants what will they do to the place while you try to get them out)

Exactly my thoughts. I am also concerned that I will have to pay more than what I get in the rental income in refurbishing the place after the tenants leave.